Abstract:

Developed countries experienced serious difficulties after the global financial crisis and used an excessive monetary easing strategy. Due to the decoupling, developing countries recorded high growth rates through raising capital inflows. In this new era, there is an effort to replace the price stability and the inflation targeting regime with a new monetary policy sensitive to financial stability. Also the central bank headed an unorthodox monetary policy in Turkey. The new monetary policy includes new tools such as interest rate corridor and reserve options mechanism. This paper examines this unorthodox monetary policy aiming to sustain macroeconomic stability taking into account the financial stability.

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